The Organization of Oil Trading Tweeters #OOTT Merges Powerful Data With a Culture of Openness

A number of traders have come together under the hashtag #OOTT, the Organization of Oil Trading Tweeters, to share oil news, events, and a public data set of tanker traffic and global oil trade flows that rivals some of the best proprietary market analytics.

Few industries are known to be more secretive than oil trading, in which the price and flows of vital hydrocarbons are defined by anonymous individuals with exclusive access to rumors and data. Although this portrait may still apply to many traders of physical oil volumes, or traders in hedge funds and other financial institutions, a new Twitter community is bucking the trend. A number of traders have come together under the hashtag #OOTT, the Organization of Oil Trading Tweeters, to share oil news, events, and a public data set of tanker traffic and global oil trade flows that rivals some of the best proprietary market analytics.

The group has six main contributors, with others likely to be recruited as the scope of their analysis grows, but the hashtag has exploded in popularity in recent months as followers have been drawn to #OOTT’s news and information, highly detailed and accurate spreadsheets (which come within a stone’s throw of EIA’s import data on a weekly basis), and the group’s culture of teamwork and openness. Traditionally, an early read on inventory builds and draws would be a carefully guarded secret. On #OOTT, it’s for everyone.

Crowdsourced tanker tracking

Today, for example, #OOTT’s tanker tracking analysis enabled them to estimate U.S. imports within approximately 100,000 barrels per day of EIA’s official report.

The hashtag was initiated by Samir Madani (@Samir_Madani), an independent financial trader based in Sweden. Overwhelmed with oil news, Madani came up with the idea to aggregate important oil market research and data in one place. “I want to spend more time learning about the industry, the market, and the commodity,” Madani told The Fuse. “Oil is a confluence of my many interests: Geopolitical, OPEC, non-OPEC producers, so I want to understand the cultures involved.” Madani also noted that establishing a hashtag enabled him to create a community that wasn’t centrally governed.

“Roughly 63 percent of world oil is transported by sea, so I had an account for many years with marinetraffic.com, which allows you to track vessels worldwide,” said Madani. “I started researching and looking at top importers and exporters of crude. I built up fleets in marine traffic based on their vessels. Now at any time of day I can take out my mobile phone, power up my app, and find where fleets are located.”

Tracking vessel flows and volumes in and out of ports helps the traders of #OOTT anticipate the direction and magnitude of data releases, in particular the U.S. Energy Information Administration’s (EIA) market-moving inventory data every Wednesday. Today, for example, #OOTT’s tanker tracking analysis enabled them to estimate U.S. imports within approximately 100,000 barrels per day of EIA’s official report. The inventory build or draw in EIA’s report can be approximated by matching estimated import data with the previous week’s consumption data—which typically fluctuates less on a weekly basis.

The group monitors which boats have docked at which ports, and by tracking changes in how low the boats sit in the water (or draft depth) and cross-referencing the change with vessel capacity, #OOTT is able to calculate how much oil or product was loaded or unloaded at each location.

At first, Madani began with flows into U.S. PADD 3—the petroleum administration for defense district covering the Gulf Coast—and watched tankers flowing into the Port of Houston and the Louisiana Offshore Oil Port (LOOP). Through research and experimentation, he reached a point where he was able to predict the weekly outcome for that district. But to get the full picture, Madani needed data on PADD 1 and PADD 5, but it was too much for a single person to monitor, so he recruited help through Twitter. The call was a success—Madani began recruiting a core group to help maintain #OOTT’s expansive tanker spreadsheets. Precision is key: The group monitors which boats have docked at which ports, and by tracking changes in how low the boats sit in the water (or draft depth) and cross-referencing the change with vessel capacity, #OOTT is able to calculate how much oil or product was loaded or unloaded at each location.

In addition to preempting the Weekly Petroleum Status Report, #OOTT traders track tanker flows from unstable oil producing countries and monitors the behavior of national fleets. The information they uncover may confirm or contradict the information given in news reports. For example, according to Madani, he could see through ClipperData that certain reported disruptions in Venezuela and Nigeria had not manifested in tanker volumes. The group also tracks Iran’s floating storage, and calculates it to be 29 million barrels—far below official estimates of 47 million barrels.

News and information for independent traders

The emphasis on tankers has made the hashtag grow dramatically in popularity—Madani’s analytics show tens of thousands of impressions on single tweets. Professionals in the industry, including journalists and analysts, have also flocked to the hashtag. But many of the traders in the group don’t have a formal background in finance. Some are fully self-sufficient from trading activity, while others maintain full-time jobs and trade as a hobby.

Lisa Ward (@Lisa_Ward1990), a trader based in northern England, was brought to the hashtag by Madani because she already had a good handle on changes in physical dynamics. She focuses on aggregating research and news, but is now contributing to tracking tankers along with Madani in order to put together estimates for crude flows into the U.S. Gulf Coast, the East Coast, and the West Coast. She and the others have recently started tracking volumes from Venezuela and Libya—two major oil market uncertainties—more closely, along with tankers headed to China.

“I’ve always been of the camp that information should be free and open. So that’s why I’m pleased to be part of it. We just want people to come and share their knowledge and help each other. I’ve met some incredible people through it.”

Oil traders, particularly financial players, are attracted to the oil futures markets because of its volatility and deep liquidity. Its high volume appeals to day traders and allows them to “scalp”—to get in and out of the market quickly by taking positions and closing them out within five to ten minutes. Some only day trade and don’t hold positions overnight while others have longer-term positions, perhaps as much as several weeks to a month out.

Heidi (@Heidstertrades), who has been trading oil futures and options for roughly four years and is also active in forex and large stocks, says she was attracted to participating in the development of the hashtag because it helps facilitate the openness and exchange of data. “That’s what I really like about it,” Heidi told The Fuse. “I found Twitter a few years back, but I never realized how powerful it could be until recently.”

When following Madani and he asked for support for #OOTT, she jumped on board. “I’ve always been of the camp that information should be free and open. So that’s why I’m pleased to be part of it. We just want people to come and share their knowledge and help each other. I’ve met some incredible people through it.”

Heidi handles the events page for the hashtag and logs news developments, and at the end of each week she puts together a tab with a review of the news and charts that are most significant for the market.

Besides tracking tankers, they keep a close eye on financial developments, which have recently been dominated by the “Brexit vote” or speeches from Fed Chairman Janet Yellen, and movements in the U.S. dollar versus other currencies. They use chart analysis and trade on technicals, but the information available on Twitter and the development of the hashtag still primarily focus on physical fundamentals and the flow of oil tanker traffic in the global market.

“You’ve got to filter out the information that you find more important than the others,” said Ward, who has been trading crude for a little more than a year. “Some of the news, such what was going on in Canada with the wildfires and what’s been going on in Nigeria with the avengers, can’t be ignored, but you just have to figure out what’s important to what you trade.”

Risk of oversaturation

The popularity of the hashtag has surged since its launch in April, with Hashtracking estimating its reach to be over 3 million users. Today’s oil market is characterized by information overload: On a daily basis, analysts and market watchers are inundated with headlines, charts, and pieces of data that come their way. There’s some risk that #OOTT could become oversaturated, although Madani says he’s not concerned. At present, the community sees the hashtag as a way of streamlining and smartly aggregating news and information so that irrelevant details can be ignored.

At present, the community sees the hashtag as a way of streamlining and smartly aggregating news and information so that irrelevant details can be ignored.

Where will the hashtag go from here? The bet is that as the oil markets continue to be inundated with streams of news, research, and data, #OOTT will expand with more followers and contributors, particularly since the collegiality and the willingness to share information with others will give it durability and credibility moving forward. The traders point out that they are all in the same boat, so to speak.

“We want to help other traders in the markets and encourage them to get involved with hashtag so we can be a one-stop shop,” said Ward. “It is growing organically. A lot of different people are using the hashtag now.”

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The Fuse is an energy news and analysis site supported by Securing America’s Future Energy. The views expressed here are those of individual contributors and do not necessarily represent the views of the organization.

Issues in Focus

Safety Standards for Crude-By-Rail Shipments

A series of accidents in North America in recent years have raised concerns regarding rail shipments of crude oil. Fatal accidents in Lynchburg, Virginia, Lac-Megantic, Quebec, Fayette County, West Virginia, and (most recently) Culbertson, Montana have prompted public outcry and regulatory scrutiny.

2014 saw an all-time record of 144 oil train incidents in the U.S.—up from just one in 2009—causing a total of more than $7 million in damage.

The spate of crude-by-rail accidents has emerged from the confluence of three factors. First is the massive increase in oil movements by rail, which has increased more than three-fold since 2010. Second is the inadequate safety features of DOT-111 cars, particularly those constructed prior to 2011, which account for roughly 70 percent of tank cars on U.S. railroads. Third is the high volatility of oil produced from the Bakken and other shale formations, which makes this crude more prone towards combustion.

Of these three, rail car safety standards is the factor over which regulators can exert the most control. After months of regulatory review, on May 1, 2015, the White House and the Department of Transportation unveiled the new safety standards. The announcement also coincided with new tank car standards in Canada—a critical move, since many crude by rail shipments cross the U.S.-Canadian border. In the words DOT, the new rule:

Since the rule was announced, Republicans in Congress sought to roll back the provision calling for an advanced breaking system, following concerns from the rail industry that such an upgrade would be unnecessary and could cost billions of dollars. The advanced braking systems are required to be in place by 2021.

Democrats in Congress have argued that the new rules are insufficient to mitigate the danger. Senator Maria Cantwell (D-WA) and Senator Tammy Baldwin (D-WI) both issued statements arguing that the rules were insufficient and the timelines for safety improvements were too long.

The current industry standard car, the CPC-1232, came into usage in October 2011. These cars have half inch thick shells (marginally thicker than the DOT-111 7/16 inch shells) and advanced valves that are more resilient in the event of an accident. However, these newer cars were involved in the derailments and explosions in Virginia and West Virginia within the past year, raising questions about the validity of replacing only the DOT-111s manufactured before 2011.

Before the rule was finalized, early reports indicated that the rule submitted to the White House by the Department of Transportation has proposed a two-stage phase-out of the current fleet of railcars, focusing first on the pre-2011 cars, then the current standard CPC-1232 cars. In the final rule, DOT mandated a more aggressive timeline for retrofitting the CPC-1232 cars, imposing a deadline of April 1, 2020 for non-jacketed cars.

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DataSpotlight

The recent oil production boom in the United States, while astounding, has created a misleading narrative that the United States is no longer dependent on oil imports. Reports of surging domestic production, calls for relaxation of the crude oil export ban, labels of “Saudi America,” and the recent collapse in oil prices have created a perception that the United States has more oil than it knows what to do with.

This view is misguided. While some forecasts project that the United States could become a self-sufficient oil producer within the next decade, this remains a distant prospect. According to the April 2015 Short Term Energy Outlook, total U.S. crude oil production averaged an estimated 9.3 million barrels per day in March, while total oil demand in the country is over 19 million barrels per day.

This graphic helps illustrate the regional variations in crude oil supply and demand. North America, Europe, and Asia all run significant production deficits, with the Middle East, Africa, Latin America, and Former Soviet Union are global engines of crude oil supply.